WeHo City Council Rejects Korman’s Appeal of Ban on Its Short-Term Corporate Rentals

In a three-to-two vote, the West Hollywood City Council tonight rejected an appeal by the owner of two residential towers at 8500 Sunset Blvd. of a decision that bars the use of one of the buildings for luxury short-term rentals. The owner is BPREP 8500 Sunset LLC, a company established by the Brookfield Property Group and Korman Communities, whose business is renting high-end luxury suites for short-term stays.

BPREP purchased the 8500 Sunset property from CIM Group last summer, and Korman announced that it planned to turn the buildings into one of its AKA hotels. Korman operates 11 such hotels, which offer extended stays to corporate executives and other affluent guests in locations such as Beverly Hills, where rooms rent for a minimum of one week for as much as $1,000 a night, and in other locations in New York, London, Philadelphia where one can rent a room for only a one-night stay.

The City of West Hollywood quickly notified Korman that such short term corporate rentals have been banned in WeHo, part of a move by the City Council to prevent housing for residents from being taken off the market. Korman responded by announcing that the 80 units in its East Tower would be rented as conventional apartments (with eight of them set aside as affordable housing.) The 110-unit West Tower would be used for short-term stays (with nine affordable units). Korman said it would require guests to stay for at least 31 days to comply with the city ban on short-term rentals.

John Keho, West Hollywood’s interim director of planning and development services, ruled last November that Korman was using the West Tower units for “temporary lodging,” effectively making it a hotel. Korman appealed his decision to the West Hollywood Planning Commission, which upheld it, leaving the next option an appeal to the City Council.

Korman’s argument turned largely on the definition of short-term rentals and its contention that the City of West Hollywood had not formally established a requirement for a one-year initial lease, which it now was demanding. Ted Green, the lobbyist representing Korman, and one of its lawyer, Eric George, also argued that the city was being unfair to young newcomers to West Hollywood, who might not want to commit initially to a one-year lease. They and other speakers on Korman’s behalf also said that banning short-term rentals such as those offered by AKA would inhibit creative people such as actors from staying in West Hollywood while making a film or engaging in other creative projects.

Illustration of 8500 Sunset Blvd.

Councilmember John D’Amico and Mayor John Duran supported Korman’s appeal. D’Amico acknowledged the shortage of affordable housing in West Hollywood but said that restricting AKA’s rental terms was an effort to address a “luxury housing crisis” that the city does not have. D’Amico noted that other new and expensive apartment buildings such as the Domain, the Huxley and the Dylan also have been renting out units on a short-term basis to corporate clients, which he said was evidence that there wasn’t sufficient demand for such expensive units. Duran argued that Korman’s extended-stay corporate rental approach was another example of the “disruptive” business models such as that of Uber and Lyft that society will have to adapt to.

Councilmember John Heilman strongly disagreed with D’Amico, saying that the long history of the project, which was first proposed in 1999, included many changes authorized by the City of West Hollywood that were all about making what initially was a retail and office project into a residential one. Councilmember Lauren Meister argued that Korman was breaching a development agreement reached in the early days of the project when the developer sought permission to use the buildings as apartments or condominiums. She also noted that the units in both of the buildings are counted by the state in its calculation of the size of the city’s permanent housing stock, another sign that the project was intended to provide permanent residences.

Councilmember Lindsey Horvath called out Korman for renting some of its affordable units in the West Tower at market rates. She and Heilman also cited a similar move by Korman in Beverly Hills, where it bought an apartment building and began using it for short-term corporate stays without that city’s permission. It eventually negotiated a deal with the City of Beverly Hills to permit it to continue.

Horvath and Rachel Dimond, the city’s senior planner, cited evidence that Korman wasn’t being honest in its claim that it was using the West Tower solely for rentals of 31 days or more. Dimond noted several examples where those who rented apartments in the building were given refunds after ending their stays in less than 31 days. Horvath also noted that a petition supporting Korman that was presented to the Planning Commission contained a forged signature of a recently born child.

D’Amico argued that even if the city barred Korman from using the building for extended corporate stays, it was unclear how it could effectively enforce the ban.

It is unclear what the next steps are for Brookfield and Korman, although those familiar with the situation say it is likely that it will bring a lawsuit against the city.

I wish one of the CouncilMembers who opposed this had made this point: if this developer can’t rent their luxury units at the rate they want, then they should drop the rent, even if they take a loss. They made an agreement with the City, which changed over time, and it isn’t the City’s responsibility to start allowing them to do short-term rentals, simply because their business plan didn’t work out. I doubt the developer is going to go under, as a result. And maybe this would show them, and other developers (such as the Dylan and Huxley, who are also illegally doing short-term rentals), that we need some modest apartment buildings constructed, places where people who have an average income can afford. Instead, all new developments seem to be centered on squeezing every dime they can out of every square foot, and in this case, it seems to have backfired on them.

Neglected to mention the astute analysis and comments from Council Members Horvath and Meister. It’s a blessing to have at least three critical thinkers on board.

The remaining council members should view and study video of the meeting several times as their proper introduction to municipal law and contracts…..then follow up periodically until they understand it and can explain it in a cogent manner.

I agree that all three were great, but Heilman really stood out, like I haven’t seen him, in awhile. This was carefully thought out, and covered every argument; the complete history of all of the situation. And his rebuttal to Duran was also good. As “pro-developer” as he is often accused to be, this was a shining moment, and he did the right thing.

Having attended the meeting I was proud of the coherent and intelligent analysis of the facts and City policies by Council member Lauren Meister and the cogent arguments of Lindsay Horvath . But it was professor John Heilman who provided a formidable defense of the City’s codes and community values and exposed the intellectual duplicity of the developer point by bloody point. I highly recommend you watch his presentation just to see a masterful analysis.

Mayor Duran was predictably pandering to the developer with fictional facts, phony premises and specious sophistry. John D’Amico’s thought process can charitably described as muddled and pointless; it was difficult to ascertain why he felt that caving to the developer was in any way in the best interest of the residents of the City. Had the Council overturned the Planning Commission, it was unclear if the City could then insist upon retaining the 17 affordable housing units on site. Intent upon protecting the City in case of any future litigation, John Heilman made a point of effectively rebutting each of their assertions.

While we currently have a glut of luxury units, eventually the market will adjust itself and the rents will become more affordable. But giving this developer the right to essentially use these units to operate a hotel does zero to resolve our housing crisis.

It is very disconcerting to have Council members publicly state that the City can’t or won’t enforce our own laws and regulations, particularly when such statements undermine the goals of the community. Council members are elected to make the law work of the community not to undermine the law for the benefit of well heeled developers. If every developer is granted the right to decide how agreements or zoning ordinances should apply to them we might as well not have any municipal government.

I concur Steve Martin! Everyone wants to have luxury boutique hotels when it’s duppose to be long term rentals. Then the developers want to revoke or sue to overturn decades of protects so not to ensure those units are maintained or remain affordable units but luxury and expensive for only reasons of profiteering not protecting city and state codes. They benefited by agreeing to terms and now want to sue just to dictate to the city that these units and apartments were never part of the agreement! FYI developer we voted on a city referendum to make sure affordable units would be protected by combating Ellis Act. The state passed a law last summer and the California Supreme Court upheld cities to combat displacement of residents due to Ellis particularly in the cities of San Francisco San Jose and Santa Monica over greedy landlords and developers from swallowing all the housing up like they are banks repossesing foreclosed properties, but actually need not follow federal state and local laws they they think the can manipulate or hire attorneys to make up their own legal jargon or find loopholes in our laws. Now we have local developers telling us the law can be contested to prevent affordable housing and make AirBnB the law of Weho not ensuring residents be able to be housed or afford to remain in Weho but businesss is open to wealthy visitors to be temporary residents. What happens to us who rely or need affordable units?

Hear, Hear, Steve. (And we’ll done, Council members Meister, Horvath—and especially Heilman. VERY disappointed in Councilmember D’Amico & Mayor Duran in their willingness to turn a blind eye to yet another developer AGAIN violating their own agreements, the duly passed laws & codes, and running roughshod over the CITIZENS WHO LIVE AND VOTE HERE.

This vote should have been unanimous. The building is clearly in violation. I don’t understand how the two council members could vote for this without some external reason that has not been expressed to date.

Is John D’Amico TRYING to lose the next election? His actions and words lately seem to be on the side of the developers and not on the residents of WeHo. He sure has changed. We don’t have a luxury housing crisis. That is the most ridiculous thing I’ve ever heard. He used to partner up with Lauren Meister but now, more and more, he is teaming up with Duran. That is never a good thing.

And why are they permitting the Dylan, Huxley and Domain to rent short-term (even if it is 31-days or more). Make them lower their rates or make more units for low-income people! That is what we need.

Excellent point, Alison re the short-term rental violations at the Dylan, Huxley etc. What is needed is better and more vigorous enforcement of the codes under which these projects were built and the competing interests of the city and the CITIZENS WHO LIVE AND VOTE HERE in ensuring the protection of our long-term rental housing stock—NOT caving to strong-arming by developers illegally acting to make their violations a fair accompli to be ratified by weak knees on the Council.

Those were the two most predictable votes, as always. As to the one who suggests that it’s unclear how the city would effectively enforce a ban on short-term rentals, I submit that there are people willing to serve in public office who might figure out a way to do just that.

Wonder how long this is going to persist with affordable rentals not even being rented to local residents on the affordable housing list never mind section those on section 8 vouchers. Now these companies are dictating that the cities ordinances can’t be enforced or get 1 extra vote from a council to throw decades worth of ordinances our the window. How upsetting this has become of developers lying and eventually taking away housing ensured through the affordable housing trust! When is this going to stop or when will the city sue or take legal action against them not the other way around? The city council, the planning commission, rent stabilization commission and Peter Noonan need to do something about this from festering from a point-of-no-return on lack of affordability in rent and affordable units in this damn city! Luxury and bougie and upscale abs Sunset Boulevard I guess are only suppose to be places for the affluent and rich? I suppose this is to permanently overshadow is local residents wanting to remain and live in the sunset neighborhood too without having to justify ourselves or keep our heads low and our modest lives hidden from view. The mentality is that the rich and the elite can flaunt wealth. Just the other day the weho tourism board flaunted 1. 5 billion in tourist revenue. Which is the trickle down to affordable holding for existing residents or to enforce this. I am disgusted by this! I guess people who can afford $1,000 a night stay have more clout than a local wehoan who is on a fixed income! I quick thank You is in order to the members of the panning commission and the three members of the city council. John Duran and John D’Amico why do you boast there needs to be affordable housing but yet you keep changing or not enforcing ordinances to accommodate developers interests over securing affordable housing for residents not ensure temporary housing for wealthy production companies film studios that house people in weho or people stateside or international who stay and live bougie without a lease that is affordable tenants must have and abide by with adhering to leases, they should be obligated to do the same! Business is Business I guess in weho where industry studios and hotels have the upper hand! What a low down dirty shame!